The resumption in optimism that the Federal Reserve might finally begin raising US interest rates in December has encouraged devoted bullish investors to reinvest back into the Dollar. Sentiment remains bullish towards the US economy and with the acquired clarity from the mildly hawkish FOMC minutes concerning the potential US interest rate rise timings, Dollar strength may take center stage in the global currency markets. There is an event risk for the Dollar on Tuesday with the release of the latest US Q3 GDP which may shed more light on the health of the American economy. With Fed board members placing a strong emphasis on the strength of US data as a condition to raise US interest rates in December, a US Q3 GDP that exceeds expectations may provide the Fed with another compelling reason to move ahead with raising rates before year end.
The elevated expectations around the Fed raising US interest rates have translated to the Dollar Index almost clipping the psychological 100 resistance. Many see the 100.0 level on the USD index as a critical resistance, and the profit-taking on the Dollar last week brings some support to this. Whilst most believe that the USD has reached its “top” already, it is the contrast in monetary sentiment elsewhere and threat that other central banks could ease monetary policy further that is leading to expectations that the USD could still increase in value in the longer-term.
This index is technically bullish and a breakout above the key 100.0 resistance may invite an opportunity for buyers to send prices towards the next relevant level at 102.0, and the highs of March 2003. Technical indicators such as the MACD point to the upside and prices are also above both the 20 and 200 SMA.
WTI Oil continues to trade with heightened sensitivity following Saudi Arabia’s cabinet announcing on Monday that it was ready to cooperate with OPEC and non-OPEC countries to achieve market stability. Prices dipped below $40.50 during the European trading session before bouncing back to trade around $42.60 as of writing. The ceaseless theme of an aggressive oversupply in the markets and faltering global demand for WTI oil will continue to depress prices moving forward. The OPEC meeting scheduled for December may offer the clarity investors have sought on how the organizations plans to tackle the global oversupply, especially with this new development.
The USDCAD is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. A breakout above the 1.3450 resistance may open a path to the next relevant level at 1.3750.
The GBPAUD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. Previous support at 2.1150 may act as a dynamic resistance which should invite sellers to send prices towards 2.0500.
The EURAUD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. The breakdown below the 200 SMA may act as a signal that prices may decline further down to the next relevant support at 1.4450.
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